The new Employment in Europe 2010 report presented today underlines how young people have borne the brunt of the crisis, with unemployment disproportionately hitting 15-24 year olds and reaching over 30% in some countries. Although there are consistent signs of the EU labour market stabilising, with indications of the beginnings of an upturn in some Member States, the crisis has had a profound effect on employment and the overall recovery of the EU economy remains fragile. The rise in unemployment combined with limited opportunities to re-enter work has aggravated the risk of a surge in long-term unemployment or people leaving the labour market altogether.The report stresses that it might be some time before we see a clear upswing for jobs.

"European labour markets will emerge from the crisis profoundly changed. That's why workers and employers must be ready with the right skills and incentives to adapt to the changing realities" said László Andor, EU Commissioner for Employment, Social Affairs and Inclusion. He added: "We are working with all our partners, including Member States, to ensure that people have the right skills for the jobs of tomorrow. Our Europe 2020 target is to reach 75% employment and getting people into work is the main objective of two of our flagship initiatives announced this year: "Youth on the Move" IP/10/1124and "New Skills and Jobs" IP/10/1541 With these challenges in mind, the 22nd annual edition of the Employment in Europe report takes a deeper look at the key issues for future EU labour market policy. It covers in particular the impact of the labour market recovery measures adopted by Member States since the beginning of the crisis and also structural obstacles faced by young people in EU labour markets.

EU labour market policies have been effective and fair…

The report argues that not only did certain crisis measures limit the overall increase in joblessness generally, but also contributed to a fairer distribution of the burden in difficult times.

Assessing the possibilities of reinforcing existing measures, and the necessity of their phasing out as the crisis fades, is even more relevant now in times of fiscal consolidation. The report shows, for instance, that temporary public financial support in the form of in-work subsidies improves job opportunities for all groups, but can be particularly effective if specifically targeted at younger workers.

The appropriate timing of measures during different phases of the downturn is also important, for example, short time working schemes, e.g. Kurzarbeit in Germany, Cassa Integrazione in Italy or Chômage Partiel in France, are more effective in the initial phase of the downturn, whereas hiring subsidies are more relevant in the recovery phase as they can speed up job creation.

…but now structural obstacles have to be tackled urgently, especially with respect to youth

The crisis also highlighted the negative consequences of labour market segmentation between "insiders", or those working in protected regular contracts, and "outsiders", those in temporary jobs. Temporary workers are paid less (14% less on average) and receive less training and find it often very difficult to move to a regular job. This has a negative impact on productivity and is particularly relevant for youth, where temporary jobs account for 40% of their employment against 13% for the overall working-age population.

The report also emphasises the urgent need for an effective strategy to make labour markets more inclusive and to move away from their segmentation between insiders and outsiders. It notes too that young people are experiencing more and more difficulties finding work with the share of young NEETs (Not in Education, Employment or Training) rising, varying from about 4% in Denmark and the Netherlands to as high as 16-20% in Italy, Cyprus and Bulgaria.

As the report argues, more effective labour market inclusion can be achieved through the implementation of comprehensive flexicurity policy packages. This could include, as set out in the flagship 'New Skills and Jobs' presented this week, to extend the use of open-ended contractual arrangements with a sufficiently long probation period and a gradual increase of protection rights, access to training, life-long learning and career guidance for all employees. This would aim to reduce the existing divisions between those holding temporary and permanent contracts.

Background:

Employment in Europe is the main tool for the analysis of employment performance and labour market developments in the EU, the Acceding and the Candidate Countries. It provides the basic analytical and statistical background to the Joint Employment Report as well as other instruments key to the European Employment Strategy.